SME Tax – Every penny counts

Calling all small businesses, freelancers and consultants: how vigorously do you calculate your expenses claims? No I’m not talking about over-claiming; quite the contrary, I’m talking here about all those small expenses which many of you seemingly don’t even bother to put on your expenses forms.

Research amongst micro businesses, freelancers and sole traders by accounting software provider FreeAgent has revealed that only 39% claim all allowable expenses, with 20% not bothering to claim any expenses. Across the survey the main ‘culprit’ seems to be those expenses which come in at under £10 and are therefore seen as not worth claiming back.

However, if these findings were extrapolated across the small business economy it would amount to some £250 million worth of unclaimed expenses, equivalent to unclaimed tax relief of some £50 million (assuming basic tax rate only). The headlines at the moment may be very much at the other end of the tax spectrum, but if the U.K.’s smaller businesses are the backbone of the economy, they cannot afford to simply hand money over to the Treasury unnecessarily.

If you would like to speak to a tax adviser about taxation for smaller businesses and freelancers, please contact Newshams Tax Advisers on 0800 211 8657 or email us at enquiries@newshams.com.

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Tax changes hit gift aid

In our March article ‘Use it or lose it’ we commented about the way in which changes in the 2016/17 tax year could affect gift aid. This is such an important subject, particularly for charities and for those who make regular donations, that it deserves an article on its own.

Let’s start by looking at the tax changes which could potentially affect gift aid donations:

  • Personal allowance increase to £11,000.
  • A new dividend tax allowance of £5000 above which basic rate taxpayers will pay 7.5% on dividends, higher-rate taxpayers 32.5% and additional-rate taxpayers 38.1%.
  • A new personal savings allowance of £1000 for basic rate taxpayers and £500 for higher rate taxpayers.

In theory this means that an individual could have income of £17,000 and pay no tax at all. As a result, they would be unable to gift aid any donations which they make to charitable organisations. Should they continue to make a gift aid declaration then the tax authorities are likely to pursue them for payment as well as reclaiming the over-payment from charities themselves.

In order to avoid this scenario, charities should be looking to:

  • change the wording on any gift aid donation forms,
  • update their advice on gift aid on their websites and other publications,
  • give appropriate training to their employees and volunteers,
  • identify ongoing donations with a view to checking the tax status with donors.

If you would like to speak to a tax adviser about the implications of new taxation rules in respect of your tax position, please contact Newshams Tax Advisers on 0800 211 8657 or email us at enquiries@newshams.com.

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5 Star Review for Newshams Tax Advisers

We love exceeding our clients’ expectations and really appreciate the reviews and testimonials from our delighted clients.

Our good friend Kamal Harris at Division 1 Marketing (http://division1marketing.com/) / kamal@division1marketing.com has kindly put together an amazing testimonial video which you can check out below:

We look forward to helping you with your tax planning needs and exceeding your expectations!

Call Newshams Tax Advisers today on 0800 211 8657!

 

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The Panama effect

There is a fine line between legitimate tax planning and tax evasion. In fact, over the last few years it could be said that the line is becoming ever thinner as governmental and public pressure encourage individuals and organisations not simply to obey the letter of the tax law but add a moral layer to their tax planning regimes. As a result of this applied pressure, helped in part by changes in legislation, we’ve seen in recent times some multinationals start to move away from utilising every avenue of cross-border tax available to them.

Against this backdrop the ‘Panama papers’ have added fresh impetus to the tax debate. Originating from a Panamanian law firm it is alleged that some 11 million documents which purport to show money laundering and tax avoidance schemes have been leaked to a German newspaper. Reportedly the individuals and organisations affected span the globe with national authorities in a number of countries opening investigations.

What the outcome of these investigations will be is a matter for the future and no doubt action will be taken either to strengthen international or national tax legislation should the outcome warrant it. In the meantime, for the vast majority of ordinary individuals and small businesses which are able to benefit from the legitimate tax planning measures which have been introduced by Government, life goes on as before.

If you would like to speak to a tax adviser about tax planning, please contact Newshams Tax Advisers on 0800 211 8657 or email us at enquiries@newshams.com.

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Use it or lose it

For many in 2016 the return from the Easter break characterises one thing; the fast-approaching end of the tax year.  As in previous years, those who are in position to make the most of their annual ISA allowance but have not yet done so are taking action to use their allowance before they lose it at the end of the tax year.

However, with some significant changes coming in from the start of the next tax year, there is added incentive for people to ensure that they have maximise their tax position in the current year. For example changes to pension scheme rules, particularly for higher earners with the tapering of annual relief and the reduction in the lifetime allowance, could result in some significant and unexpected tax bills in future years unless action is taken now to mitigate those changes.

At the other end of the spectrum changes to personal allowances and the taxation of dividends and bank interest could affect ongoing gift aid payments as donors cease to have any tax liability. We’ll cover this in more detail in a future article but in the meantime those who believe they are likely to be affected by the change and had been meaning to make a charitable donation may find it worthwhile to do so now rather than wait until next tax year.

If you would like to speak to a tax adviser about the implications of new taxation rules in respect of your tax position, please contact Newshams Tax Advisers on 0800 211 8657 or email us at enquiries@newshams.com.

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Budgeting for tax

Announcements on sugar tax and disability benefits may have drawn the headlines, but there was certainly plenty in the March 2016 budget to make individuals and businesses reappraise their tax planning for the years ahead.

For effective planning the ‘devil is in the detail’ and as with any budget some of the detail is still to be thrashed out via consultations and negotiations with interested parties.

However, whether you are an individual, a small business or a multinational corporation you may well be advised to check that your accounting, finance and tax planning are still on track given the proposed budget changes.

For example, individuals may have a year to consider the potential effects of the new lifetime ISA, but whether they would be better off in moving some of their funds into this investment vehicle or continuing with their pension or ordinary ISA contributions will depend very much upon an individual’s circumstances.

At the other end of the scale, international corporations will have to consider carefully the implications of the proposed transfer pricing legislation and tax restrictions on offsetting losses.

The lesson from this budget, as with all previous budgets, is that tax planning and budgeting is ever-changing. Individuals and businesses alike cannot afford to simply carry on from year to year with unchanged systems and processes and approaches. As we said in our last blog post, tax need not be taxing, but in order to be effective, tax planning does require regular reviews.

If you would like to speak to a tax adviser about the implications of the latest Budget in respect of your tax position, please contact Newshams Tax Advisers on 0800 211 8657 or email us at enquiries@newshams.com.

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Tax Simplification For Small Business

“Tax need not be taxing” so the saying goes but it can sometimes be difficult to cut through speculation, proposal and rumour and get to the heart of how tax should actually be calculated.

This is particularly true around Budget time when business organisations and interested parties are all engaged in putting forward their ideas and proposals in an attempt to influence the Chancellor of the Exchequer.

For example, at the time of writing the budget is only a day away and, whilst the CBI are concentrating on areas such as capital allowances and long term equity investments, the FSB is looking for a simplified small business tax regime which is centred on a single tax payment.

Adding to the mix, the Office of Tax Simplification (OTS) has issued its recommendations for simplifying tax for smaller companies. Containing “a mix of long range structural change ideas and simpler short term administrative improvements” the review recommends that the tax system is simplified so that micro businesses can receive the benefits of incorporation without the administrative burden.

Recommendations include aligning filing and payment dates; eliminating sundry tax allowances and potentially calculating corporation tax on a cash basis for the smallest companies.

One discussion area which has attracted headlines is the idea that profits from the smallest companies could be taxed on the shareholders rather than the company. This ‘look through’ idea was introduced in New Zealand in 2011, although a slow take-up there has been attributed to complex compliance obligations.

Whether this idea remains as a discussion point or comes into force, anything which simplifies the tax calculation burden for small businesses can only be seen as a positive move.

If you would like to speak to a tax adviser about how tax need not be taxing for your business, please contact Newshams Tax Advisers on 0800 211 8657 or email us at enquiries@newshams.com.

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Year End Tax Planning

Have you implemented any year end tax planning yet?

With the end of the 2015/16 tax year fast approaching, there is still time to implement some tax planning, but you need to act quickly.

Newshams Tax Advisers are experts at providing a whole range of tax planning solutions for both individuals and businesses. We also have specialist tax planning solutions for landlords and property owners.

So if you want leading tax experts to help minimise your tax costs so you can enjoy more of your hard earned wealth, call Newshams Tax Advisers today on 0800 211 8657.

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Call Newshams Tax Advisers for your tax planning solutions today!

Call Newshams Tax Advisers for your tax planning solutions today!

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RBS ‘enjoyed £1bn tax breaks after investing in Harry Potter’

RBS ‘enjoyed £1bn tax breaks after investing in Harry Potter’

RBS set up 25 companies to plough money into the movie industry, which are still making profits for the taxpayer-backed bank!

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/12160752/RBS-enjoyed-1bn-tax-breaks-after-investing-in-Harry-Potter.html

 

 

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Scam HMRC Emails

HM Revenue and Customs (HMRC) has again warned about scam emails on its latest blog for tax agents tinyurl.com/jbc7w4x.

HMRC reminds us that it does not matter what the subject concerns, whether it’s for tax credits, PAYE notices and/or any reminders regarding a tax payment or refund, it will NEVER send an email asking us to disclose personal or financial information.

Scammers are now starting to use the HMRC logo and becoming ever more sophisticated.

Apart from looking out for poor grammar and spelling mistakes, some of the key things to watch out for include the following:

  • Incorrect email address – You should check the “from” address. Fraudsters often try to create email addresses which appear to be genuinely from HMRC‎, for example, “@hmrc.gov.uk”.
  • Bogus website‎ – Scam emails will often include links to bogus websites, which appear to be HMRC, but which will not be and instead will ask for personal information.
  • Urgent Action required – Often the fraudsters ask you to take some immediate action. Watch out for phrases like “you only have 3 days to reply” or “urgent action needed”.

Overall, we all need to be increasingly vigilant and on guard, particularly around key tax filing and payment dates.

If you are looking for any advice on your tax affairs, please contact one of our london tax experts at Newshams Tax Advisers on 0800 211 8657 or email us at enquiries@newshams.com

We look forward to assisting you with your tax queries.

Newshams…. the professional choice!

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